Citigroup Must Face N.Y. Lawsuit Over Fraud Scams

A federal judge Tuesday rejected Citigroup's bid to dismiss a lawsuit by New York Attorney General Letitia James accusing its Citibank unit of failing to reimburse customers who fall victim to online scammers.

U.S. District Judge Paul Oetken in Manhattan said Citigroup must face James' claim it violated a federal law concerning unauthorized wire transfers, and parts of three other claims. He also dismissed some claims, in part because federal law preempted them.

James sued Citibank in January, saying the inability of its security systems to investigate red flags such as unrecognized devices, changes in user names and passwords, and "phishing" enabled scammers to steal millions of dollars from customers.